S-8

As filed with the Securities and Exchange Commission on November 20, 2002

Registration No. _____________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

__________________________

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

SUN MICROSYSTEMS, INC.
(Exact Name of Registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization) 4150 Network Circle
Santa Clara, CA 95054
(Address, including zip code, of
Registrant’s Principal Executive Offices) 94-2805249
(I.R.S. Employer
Identification Number)

PIRUS NETWORKS, INC. 2000 STOCK OPTION PLAN
(Full Title of the Plan)

Scott G. McNealy
Chief Executive Officer
SUN MICROSYSTEMS, INC.
4150 Network Circle
Santa Clara, CA 95054
(650) 960-1300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

__________________________

Copy to:

Katherine A. Martin, Esq.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300

CALCULATION OF REGISTRATION FEE

			Proposed Maximum		Proposed Maximum
	Amount to be		Offering Price		Aggregate Offering		Amount of
Title of Securities to be Registered	Registered		Per Share(1)		Price		Registration Fee
Common Stock, par value $0.00067 per share, to be issued upon exercise of options granted under the Pirus Networks, Inc. 2000 Stock Option Plan, as amended (the "Plan”)		2,608,846	$	0.52	$	1,356,599.92	$	124.81

(1) The Proposed Maximum Offering Price Per Share was computed pursuant to Rule 457(h) under the Securities Act of 1933, as amended (the “Securities Act”) solely for the purpose of calculating the registration fee. Computation is based on the weighted-average per share exercise price (rounded to the nearest cent) of outstanding options under the Plan, the underlying shares of which are registered hereby.

TABLE OF CONTENTS

PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
	Item 3. Information Incorporated by Reference.
	Item 4. Description of Securities.
	Item 5. Interests of Named Experts and Counsel.
	Item 6. Indemnification of Directors and Officers.
	Item 7. Exemption from Registration Claimed.
	Item 8. Exhibits.
	Item 9. Undertakings.
SIGNATURES
INDEX TO EXHIBITS
EXHIBIT 4.1
EXHIBIT 5.1
EXHIBIT 15.1
EXHIBIT 23.2

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Information Incorporated by Reference.

     There are hereby incorporated by reference into this Registration Statement the following documents and information heretofore filed with the Securities and Exchange Commission (the “Commission”) by Sun Microsystems, Inc. (the “Registrant”):

1.	The Registrant’s Annual Report on Form 10-K for the year ended June 30, 2002, filed pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
2.	The Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 29, 2002, filed pursuant to Section 13(a) of the Exchange Act.
3.	The Registrant’s Current Report on Form 8-K filed on August 9, 2002, pursuant to Section 13(a) of the Exchange Act.
4.	The Registrant’s Current Report on Form 8-K filed on September 30, 2002, pursuant to Section 13(a) of the Exchange Act.
5.	The description of the Registrant’s Common Stock contained in Registrant’s Registration Statement on Form 8-A relating to the Registrant’s Common Stock filed pursuant to Section 12(g) of the Exchange Act on October 24, 1986, as amended.
6.	The description of the Registrant’s Preferred Share Purchase Rights contained in Registrant’s Registration Statement on Form 8-A/A Amendment No. 10 filed pursuant to Section 12(g) of the Exchange Act on September 26, 2002.

     All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be part hereof from the date of filing of such documents.

Item 4. Description of Securities.

     Not applicable.

Item 5. Interests of Named Experts and Counsel.

     Not applicable.

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Item 6. Indemnification of Directors and Officers.

     Section 145 of the General Corporation Law of the State of Delaware, as amended, provides that under certain circumstances a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at its request in such capacity in another corporation or business association, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

     Section 11 of the Restated Certificate of Incorporation of the Registrant provides in effect that, subject to certain limited exceptions, the Registrant shall indemnify its directors and officers to the extent authorized or permitted by the General Corporation Law of the State of Delaware. The directors and officers of the Registrant are insured under policies of insurance maintained by the Registrant, subject to the limits of the policies, against certain losses arising from any claims made against them by reason of being or having been such directors or officers. Like indemnification and insurance is also provided to those employees of the Registrant who serve as administrators of the Plan. In addition, the Registrant has entered into contracts with certain of its directors providing for indemnification of such persons by the Registrant to the full extent authorized or permitted by law, subject to certain limited exceptions.

Item 7. Exemption from Registration Claimed.

     Not applicable.

Item 8. Exhibits.

Number	Document
4.1	Pirus Networks, Inc. 2000 Stock Option Plan, as amended
5.1	Opinion of Counsel with respect to the legality of the securities being registered
15.1	Letter: Unaudited Interim Financial Information
23.1	Consent of Counsel (contained in Exhibit 5.1)
23.2	Consent of Ernst & Young LLP, Independent Auditors

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Item 9. Undertakings.

     (a)  The undersigned Registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.

          (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

     (b)  The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

     (c)  Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant, Sun Microsystems, Inc., certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Santa Clara, State of California, on November 20, 2002.

SUN MICROSYSTEMS, INC
By:	/s/ Stephen T. McGowan
	Stephen T. McGowan Chief Financial Officer and Executive Vice President, Corporate Resources

     Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

SIGNATURE	TITLE	DATE
/s/ Scott G. McNealy Scott G. McNealy	Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer)	November 20, 2002
/s/ Stephen T. McGowan Stephen T. McGowan	Chief Financial Officer and Executive Vice President, Corporate Resources (Principal Financial Officer)	November 20, 2002
/s/ Kenneth A. Barker Kenneth A. Barker	Vice President, Corporate Controller (Principal Accounting Officer)	November 20, 2002
/s/ James L. Barksdale James L. Barksdale	Director	November 20, 2002
/s/ L. John Doerr L. John Doerr	Director	November 20, 2002
/s/ Judith L. Estrin Judith L. Estrin	Director	November 20, 2002
/s/ Robert J. Fisher Robert J. Fisher	Director	November 20, 2002
/s/ Michael E. Lehman Michael E. Lehman	Director	November 20, 2002

5

SIGNATURE	TITLE	DATE
/s/ Robert L. Long Robert L. Long	Director	November 20, 2002
/s/ M. Kenneth Oshman M. Kenneth Oshman	Director	November 20, 2002
/s/ Naomi O. Seligman Naomi O. Seligman	Director	November 20, 2002
/s/ Lynn Turner Lynn Turner	Director	November 20, 2002

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INDEX TO EXHIBITS

Exhibit Number	Description
4.1	Pirus Networks, Inc. 2000 Stock Option Plan, as amended
5.1	Opinion of Counsel, with respect to the legality of the securities being registered
15.1	Letter: Unaudited Interim Financial Information
23.1	Consent of Counsel (contained in Exhibit 5.1)
23.2	Consent of Ernst & Young LLP, Independent Auditors

7 EX-4.1 3 f86025exv4w1.txt EXHIBIT 4.1 EXHIBIT 4.1 AS AMENDED 11/11/02 PIRUS NETWORKS, INC. 2000 STOCK OPTION PLAN 1. PURPOSE OF THE PLAN. This stock option plan (the "Plan") is intended to encourage ownership of the stock of Pirus Networks, Inc. (the "Company") by employees, consultants and advisors of the Company and its subsidiaries, to induce qualified personnel to enter and remain in the employ of the Company or its subsidiaries and otherwise to provide additional incentive for optionees to promote the success of its business. 2. STOCK SUBJECT TO THE PLAN. (a) The total number of shares of the authorized but unissued or Treasury shares of the common stock, $.01 par value per share, of the Company (the "Common Stock") for which options may be granted under the Plan shall not exceed seventeen million four hundred and fifty thousand (17,450,000) shares, subject to reduction for the shares granted by the Company pursuant to the 2000 Restricted Stock Purchase Plan and shall be subject to adjustment as provided in Section 12 hereof. (b) If an option granted hereunder shall expire or terminate for any reason without having vested fully or having been exercised in full, the unvested and/or unpurchased shares subject thereto shall again be available for subsequent option grants under the Plan. (c) Stock issuable upon exercise of an option granted under the Plan may be subject to such restrictions on transfer, repurchase rights or other restrictions as shall be determined by the Committee. 1 3. ADMINISTRATION OF THE PLAN. (a) At the discretion of the Company's Board of Directors, the Plan shall be administered either (i) by the full Board of Directors of the Company or (ii) by a committee (the "Committee") consisting of two or more members of the Company's Board of Directors. In the event that the full Board of Directors is the administrator of the Plan, references herein to the Committee shall be deemed to include the full Board of Directors. The Board of Directors may from time to time appoint a member or members of the Committee in substitution for or in addition to the member or members then in office and may fill vacancies on the Committee however caused. The Committee shall choose one of its members as Chairman and shall hold meetings at such times and places as it shall deem advisable. A majority of the members of the Committee shall constitute a quorum and any action may be taken by a majority of those present and voting at any meeting. (b) Any action may also be taken without the necessity of a meeting by a written instrument signed by a majority of the Committee. The decision of the Committee as to all questions of interpretation and application of the Plan shall be final, binding and conclusive on all persons. The Committee shall have the authority to adopt, amend and rescind such rules and regulations as, in its opinion, may be advisable in the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any option agreement granted hereunder in the manner and to the extent it shall deem expedient to carry the Plan into effect and shall be the sole and final judge of such expediency. No Committee member shall be liable to any action or determination made in good faith. 2 4. TYPE OF OPTIONS. Options granted pursuant to the Plan shall be authorized by action of the Committee and may be designated as either incentive stock options meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or non-qualified options which are not intended to meet the requirements of such Section 422 of the Code, the designation to be in the sole discretion of the Committee. The Plan shall be administered by the Committee in such manner as to permit options to qualify as incentive stock options under the Code. 5. ELIGIBILITY. Options designated as incentive stock options shall be granted only to employees (including officers and directors who are also employees) of the Company and any of its subsidiaries. Options designated as non-qualified options may be granted to directors (whether or not employees), officers, employees, consultants, and advisors of the Company or of any of its subsidiaries. "Subsidiary" or "subsidiaries" shall be as defined in Section 424 of the Code and the Treasury Regulations promulgated thereunder (the "Regulations"). The Committee shall, from time to time, at its sole discretion, select from such eligible individuals those to whom options shall be granted and shall determine the number of shares to be subject to each option. In determining the eligibility of an individual to be granted an option, as well as in determining the number of shares to be granted to any individual, the Committee in its sole discretion shall take into account the position and responsibilities of the individual being considered, the nature and value to the Company or its subsidiaries of his or her service and accomplishments, his or her present and potential contribution to the success of the Company or its subsidiaries, and such other factors as the Committee may deem relevant. 3 No option designated as an incentive stock option shall be granted to any employee of the Company or any subsidiary if such employee owns, immediately prior to the grant of an option, stock representing more than 10% of the voting power or more than 10% of the value of all classes of stock of the Company or a parent or a subsidiary, unless the purchase price for the stock under such option shall be at least 110% of its fair market value at the time such option is granted and the option, by its terms, shall not be exercisable more than five years from the date it is granted. In determining the stock ownership under this paragraph, the provisions of Section 424(d) of the Code shall be controlling. In determining the fair market value under this paragraph, the provisions of Section 7 hereof shall apply. 6. OPTION AGREEMENT. Each option shall be evidenced by an option agreement (the "Agreement") duly executed on behalf of the Company and by the optionee to whom such option is granted, which Agreement shall comply with and be subject to the terms and conditions of the Plan. The Agreement may contain such other terms, provisions and conditions which are not inconsistent with the Plan as may be determined by the Committee, provided that options designated as incentive stock options shall meet all of the conditions for incentive stock options as defined in Section 422 of the Code. The date of grant of an option shall be as determined by the Committee. More than one option may be granted to an individual. 7. OPTION PRICE. The option price or prices of shares of the Company's Common Stock for options designated as non-qualified stock options shall be determined by the Committee, but in no event shall the option price of a non-qualified stock option be less than the fair market value of such Common Stock at the time the option is granted, as determined by the Committee. The option price or prices of shares of 4 the Company's Common Stock for incentive stock options shall be the fair market value of such Common Stock at the time the option is granted as determined by the Committee in accordance with the Regulations promulgated under Section 422 of the Code. If such shares are then listed on any national securities exchange, the fair market value shall be the mean closing price on the largest such exchange on the business day immediately preceding the date of the grant of the option. If the shares are not then listed on any such exchange, the fair market value of such shares shall be the mean closing price as reported in the National Association of Securities Dealers Automated Quotation National Market ("NASDAQ/NM") for the business day immediately preceding the date of the grant of the option. If the shares are not then either listed on any such exchange or quoted in NASDAQ/NM, the fair market value shall be the mean between the average of the "Bid" and the average of the "Ask" prices, if any, as reported in the National Daily Quotation Service for the business day immediately preceding the date of the grant of the option, or, if none, shall be determined by taking a weighted average of the means between the highest and lowest sales prices on the nearest date before and the nearest date after the date of grant in accordance with Treasury Regulations Section 25.2512-2. If the fair market value cannot be determined under the preceding three sentences, it shall be determined in good faith by the Committee. 8. MANNER OF PAYMENT; MANNER OF EXERCISE. (a) The payment of the exercise price, unless otherwise determined by the Committee, shall be paid by delivery of (i) cash or a check payable to the order of the Company in an amount equal to the exercise price of such options, (ii) shares of Common Stock of the Company owned by the optionee having a fair market value equal in amount to the exercise price of the options being exercised, (iii) any combination of (i) and (ii), provided, however, that payment of the exercise price by delivery of shares of Common Stock of the Company owned by such optionee may be made only 5 if such payment does not result in a charge to earnings for financial accounting purposes as determined by the Committee, or (iv) payment may also be made by delivery of a properly executed exercise notice to the Company, together with a copy of irrevocable instruments to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the exercise price. The fair market value of any shares of the Company's Common Stock which may be delivered upon exercise of an option shall be determined by the Committee in accordance with Section 7 hereof. To facilitate clause (iv) above, the Company may enter into agreements for coordinated procedures with one or more brokerage firms. The date of exercise shall be the date of delivery of such exercise notice. (b) To the extent that the right to purchase shares under an option has accrued and is in effect, options may be exercised in full at one time or in part from time to time, by giving written notice, signed by the person or persons exercising the option, to the Company, stating the number of shares with respect to which the option is being exercised, accompanied by payment in full for such shares as provided in subparagraph (a) above. Upon such exercise, delivery of a certificate for paid-up non-assessable shares shall be made at the principal office of the Company to the person or persons exercising the option at such time, during ordinary business hours, after 9:00 a.m. but not more than thirty (30) days from the date of receipt of the notice by the Company, as shall be designated in such notice, or at such time, place and manner as may be agreed upon by the Company and the person or persons exercising the option. Upon exercise of the option and payment as provided above, the optionee shall become a stockholder of the Company as to the Shares acquired upon such exercise. 6 9. EXERCISE OF OPTIONS. (a) Each option granted under the Plan shall, subject to Section 10(b) and Section 12 hereof, be exercisable with reference to the Vesting Reference Date (the date selected by the Committee) as follows: prior to the First Anniversary Date of the Vesting Reference Date -- zero percent (0%); on the First Anniversary Date of the Vesting Reference Date -- twenty-five percent (25%). Thereafter, additional shares shall vest equally on a monthly basis, in arrears, such that by the Fourth Anniversary Date of the Vesting Reference Date all shares shall vest, provided, however, that no option granted under the Plan shall have a term in excess of ten (10) years from the date of grant. Notwithstanding any other provisions of this section, in the event of the death of the Participant, the Participant will automatically receive twelve (12) months accelerated vesting under his or her Agreement or Stock Repurchase Agreement, if applicable, as provided in Section 9(b). To the extent that an option to purchase shares is not exercised by an optionee when it becomes initially exercisable, it shall not expire but shall be carried forward and shall be exercisable, on a cumulative basis, until the expiration of the exercise period. No partial exercise may be made for less than fifty (50) full shares of Common Stock, unless the option is exercisable for less than fifty (50) shares of Common Stock. (b) Notwithstanding the foregoing, the Agreement may provide that the option shall be immediately exercisable by the optionee provided that the optionee enters into a Stock Repurchase Agreement approved by the Committee which provides for a reverse vesting schedule in substance similar to that set forth in Section 9(a) hereof, such unvested shares being held either in escrow or otherwise by the Secretary or Treasurer of the Company until vested. 7 (c) Notwithstanding the foregoing, the Committee may in its discretion (i) specifically provide for another time or times of exercise or (ii) accelerate the exercisability of any option subject to such terms and conditions as the Committee deems necessary and appropriate. 10. TERM OF OPTIONS; EXERCISABILITY. (a) Term. (1) Each option shall expire not more than ten (10) years from the date of the granting thereof, but shall be subject to earlier termination as herein provided. (2) Except as otherwise provided in this Section 10, an option granted to any employee optionee who ceases to be an employee of the Company or one of its subsidiaries shall terminate thirty (30) days after the date such optionee ceases to be an employee of the Company or one of its subsidiaries, or on the date on which the option expires by its terms, whichever occurs first. (3) If such termination of employment is because of dismissal for cause or because the employee is in breach of any employment agreement, such option will terminate on the date the optionee ceases to be an employee of the Company or one of its subsidiaries. (4) If such termination of employment is because the optionee has become permanently disabled (within the meaning of Section 22(e)(3) of the Code), such option shall terminate on the last day of the sixth month from the date such optionee ceases to be an employee, or on the date on which the option expires by its terms, whichever occurs first. (5) In the event of the death of any optionee, any option granted to such optionee shall terminate on the last day of the sixth month from the date of death, or on the date on which the option expires by its terms, whichever occurs first. 8 (6) Notwithstanding subparagraphs (2), (3), (4) and (5) above, the Committee shall have the authority to extend the expiration date of any outstanding option in circumstances in which it deems such action to be appropriate. (b) Exercisability. An option granted to an employee optionee who ceases to be an employee of the Company or one of its subsidiaries, whether by having become permanently disabled, as defined in Section 22(e)(3) of the Code, by death, or otherwise, shall be exercisable only to the extent that the right to purchase shares under such option has accrued and is in effect on the date such optionee ceases to be an employee of the Company or one of its subsidiaries. Options granted to non-employees shall have such exercisability standards as the Committee shall determine. (c) Stockholders' Agreement. Upon exercise by the Participant, such Participant shall enter into a Stockholders' Agreement, such agreement to be on such further terms and conditions as is determined by the Committee. 11. OPTIONS NOT TRANSFERABLE. The right of any optionee to exercise any option granted to him or her shall not be assignable or transferable by such optionee otherwise than by will or the laws of descent and distribution or as otherwise required by statute and any such option shall be exercisable during the lifetime of such optionee only by him. Any option granted under the Plan shall be null and void and without effect upon the bankruptcy of the optionee to whom the option is granted, or upon any attempted assignment or transfer, except as herein provided, including without limitation any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition, attachment, divorce, trustee process or similar process, whether legal or equitable, of such option. 12. RECAPITALIZATIONS, REORGANIZATIONS AND THE LIKE. 9 (a) In the event that the outstanding shares of the Common Stock of the Company are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, or dividends payable in capital stock, appropriate adjustment shall be made in the number and kind of shares as to which options may be granted under the Plan and as to which outstanding options or portions thereof then unexercised shall be exercisable, to the end that the proportionate interest of the optionee shall be maintained as before the occurrence of such event; such adjustment in outstanding options shall be made without change in the total price applicable to the unexercised portion of such options and with a corresponding adjustment in the option price per share. (b) In addition, unless otherwise determined by the Committee in its sole discretion, in the case of any Change of Control (as hereinafter defined) of the Company, the purchaser(s) of the Company's assets or stock may, in his, her or its discretion, deliver to the optionee the same kind of consideration that is delivered to the stockholders of the Company as a result of such sale, conveyance or Change of Control, or the Committee may cancel all outstanding options in exchange for consideration in cash or in kind, which consideration in both cases shall be equal in value to those shares of stock or other securities the optionee would have received had the option been exercised (to the extent then exercisable) and no disposition of the shares acquired upon such exercise been made prior to such Change of Control, less the option price therefor. Upon receipt of consideration by the optionee, his or her option shall immediately terminate and be of no further force and effect. The value of the stock or other securities the optionee would have received if the option had been exercised shall be determined in good faith by the Committee, and in the case of shares of the Common Stock of the Company, in accordance with the provisions of Section 7 hereof. The Committee shall also have the power and right to accelerate the exercisability of any options, 10 notwithstanding any limitations in this Plan or in the Agreement upon such Change of Control. A "Change of Control" shall be deemed to have occurred if any of the following conditions have occurred: (1) the merger or consolidation of the Company with another entity where the Company is not the surviving entity and where after the merger or consolidation (i) its stockholders prior to the merger or consolidation hold less than 50% of the voting stock of the surviving entity and (ii) its directors prior to the merger or consolidation are less than a majority of the Board of Directors of the surviving entity; (2) the sale of all or substantially all of the Company's assets to a third party and subsequent to the transaction (i) its stockholders hold less than 50% of the voting stock of said third party and (ii) its directors are less than a majority of the Board of Directors of said third party; or (3) a transaction or series of related transactions, including a merger of the Company with another entity where the Company is the surviving entity, whereby (i) 50% or more of the voting stock of the Company after the transaction(s) is owned actually or beneficially by parties who held less than thirty percent (30% ) of the voting stock, actually or beneficially, prior to the transaction(s) and (ii) the Board of Directors after the transaction(s) or within sixty (60) days thereof, is comprised of less than a majority of the directors serving prior to the transaction(s). (c) No fraction of a share shall be purchasable or deliverable upon the exercise of any option, but in the event any adjustment hereunder of the number of shares covered by the option shall cause such number to include a fraction of a share, such fraction shall be adjusted to the nearest smaller whole number of shares. 13. NO SPECIAL EMPLOYMENT RIGHTS -- LEAVES OF ABSENCE. Nothing contained in the Plan or in any option granted under the Plan shall confer upon any option holder any right with respect to the continuation of his or her employment by the Company (or any subsidiary thereof) or interfere in any way with the right of the Company (or any subsidiary thereof), subject to the terms of any separate employment agreement to the contrary, at any time to 11 terminate such employment or to increase or decrease the compensation of the option holder from the rate in existence at the time of the grant of an option. Whether an authorized leave of absence, or absence in military or government service, shall constitute termination of employment shall be determined by the Committee at the time. 14. WITHHOLDING. The Company's obligation to deliver shares upon the exercise of any option granted under the Plan shall be subject to the option holder's satisfaction of all applicable Federal, state and local income, excise, employment and any other tax withholding requirements. 15. RESTRICTIONS ON ISSUE OF SHARES. (a) Notwithstanding the provisions of Section 8, the Company may delay the issuance of shares covered by the exercise of an option and the delivery of a certificate for such shares until one of the following conditions shall be satisfied: (1) The shares with respect to which such option has been exercised are at the time of the issue of such shares effectively registered or qualified under applicable Federal and state securities acts now in force or as hereafter amended; or (2) Counsel for the Company shall have given an opinion, which opinion shall not be unreasonably conditioned or withheld, that such shares are exempt from registration and qualification under applicable Federal and state securities acts now in force or as hereafter amended. (b) It is intended that all exercises of options shall be effective, and the Company shall use its best efforts to bring about compliance with the above conditions within a reasonable time, except that the Company shall be under no obligation to qualify shares or to cause a registration statement or a post-effective amendment to any registration statement to be prepared for the purpose 12 of covering the issue of shares in respect of which any option may be exercised, except as otherwise agreed to by the Company in writing. 16. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT REGISTRATION. Unless the shares to be issued upon exercise of an option granted under the Plan have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended, the Company shall be under no obligation to issue any shares covered by any option unless the person who exercises such option, in whole or in part, shall give a written representation and undertaking to the Company which is satisfactory in form and scope to counsel for the Company and upon which, in the opinion of such counsel, the Company may reasonably rely, that he or she is acquiring the shares issued pursuant to such exercise of the option for his or her own account as an investment and not with a view to, or for sale in connection with, the distribution of any such shares, and that he or she will make no transfer of the same except in compliance with any rules and regulations in force at the time of such transfer under the Securities Act of 1933, or any other applicable law, and that if shares are issued without such registration, a legend to this effect may be endorsed upon the securities so issued. In the event that the Company shall, nevertheless, deem it necessary or desirable to register under the Securities Act of 1933 or other applicable statutes any shares with respect to which an option shall have been exercised, or to qualify any such shares for exemption from the Securities Act of 1933 or other applicable statutes, then the Company may take such action and may require from each optionee such information in writing for use in any registration statement, supplementary registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for such purpose and may require reasonable indemnity to the Company and its officers and directors and controlling persons from such holder against all losses, claims, damages and liabilities arising from such use of the information so furnished and caused by 13 any untrue statement of any material fact therein or caused by the omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. 17. LOANS. The Company may make loans to optionees to permit them to exercise options. If loans are made, the requirements of all applicable Federal and state laws and regulations regarding such loans must be met and the stock issued pursuant to the exercise of such option shall be pledged to the Company pursuant to a Stock Pledge Agreement as security for the loan until such amounts are repaid. 18. MODIFICATION OF OUTSTANDING OPTIONS. The Committee may authorize the amendment of any outstanding option with the consent of the optionee when and subject to such conditions as are deemed to be in the best interests of the Company and in accordance with the purposes of this Plan. 19. APPROVAL OF STOCKHOLDERS. The Plan shall be subject to approval by the vote of stockholders holding at least a majority of the voting stock of the Company present, or represented, and entitled to vote at a duly held stockholders' meeting, or by written consent of the stockholders as provided for under applicable state law, within twelve (12) months after the adoption of the Plan by the Board of Directors and shall take effect as of the date of adoption by the Board of Directors upon such approval. The Committee may grant options under the Plan prior to such approval, but any such option shall become effective as of the date of grant only upon such approval and, accordingly, no such option may be exercisable prior to such approval. 14 20. TERMINATION AND AMENDMENT. Unless sooner terminated as herein provided, the Plan shall terminate ten (10) years from the date upon which the Plan was duly adopted by the Board of Directors of the Company. The Board of Directors may at any time terminate the Plan or make such modification or amendment thereof as it deems advisable; provided, however, that except as provided in this Section 20, the Board of Directors may not, without the approval of the stockholders of the Company obtained in the manner stated in Section 19, increase the maximum number of shares for which options may be granted or change the designation of the class of persons eligible to receive options under the Plan, or make any other change in the Plan which requires stockholder approval under applicable law or regulations, including any approval requirement which is a prerequisite for exemptive relief under Section 16 of the 1934 Act. The Committee may terminate, amend or modify any outstanding option without the consent of the option holder, provided, however, that, except as provided in Section 12, without the consent of the optionee, the Committee shall not change the number of shares subject to an option, nor the exercise price thereof, nor extend the term of such option. 21. RESERVATION OF STOCK. The Company shall at all times during the term of the Plan reserve and keep available such number of shares of stock as will be sufficient to satisfy the requirements of the Plan and shall pay all fees and expenses necessarily incurred by the Company in connection therewith. 15 22. LIMITATION OF RIGHTS IN THE OPTION SHARES. An optionee shall not be deemed for any purpose to be a stockholder of the Company with respect to any of the options except to the extent that the option shall have been exercised with respect thereto and, in addition, a certificate shall have been issued theretofore and delivered to the optionee. 23. NOTICES. Any communication or notice required or permitted to be given under the Plan shall be in writing, and mailed by registered or certified mail or delivered by hand, if to the Company, to its principal place of business, attention: President, and, if to an optionee, to the address as appearing on the records of the Company. APPROVED BY THE BOARD: January 11, 2001 ---------------- APPROVED BY STOCKHOLDERS: January 11, 2001 ---------------- AMENDMENT APPROVED BY THE BOARD: October 25, 2002 ---------------- AMENDMENT APPROVED BY STOCKHOLDERS: November 11, 2002 ----------------- 16 EX-5.1 4 f86025exv5w1.txt EXHIBIT 5.1 EXHIBIT 5.1 November 20, 2002 Sun Microsystems, Inc. 4150 Network Circle Santa Clara, CA 95054 RE: REGISTRATION STATEMENT ON FORM S-8 Ladies and Gentlemen: We have acted as counsel to Sun Microsystems, Inc., a Delaware corporation (the "COMPANY"), and have examined the Registration Statement on Form S-8 (the "REGISTRATION STATEMENT") to be filed by the Company with the Securities and Exchange Commission on or about November 20, 2002 in connection with the registration under the Securities Act of 1933, as amended (the "1933 Act") of 2,608,846 shares of the Company's Common Stock, par value $0.00067 per share (the "SHARES"), reserved for issuance under the Pirus Networks, Inc. 2000 Stock Option Plan, as amended (the "PLAN"). As your legal counsel, we have examined the Restated Certificate of Incorporation, as amended, and Bylaws of the Company, the Plan and such other documents of the Company as we have deemed necessary or appropriate for the purposes of the opinion expressed herein, and are familiar with the proceedings proposed to be taken by the Company in connection with the operation and administration of the Plan and the sale and issuance of the Shares pursuant to the Plan. It is our opinion that the Shares, when issued and sold in the manner referred to in the Plan and pursuant to the agreements which accompany the Plan, will be legally and validly issued, fully paid and nonassessable. We consent to the use of this opinion as an Exhibit to the Registration Statement and further consent to the use of our name wherever appearing in the Registration Statement and any subsequent amendment thereto. Very truly yours, WILSON SONSINI GOODRICH & ROSATI Professional Corporation /s/ Wilson Sonsini Goodrich & Rosati EX-15.1 5 f86025exv15w1.txt EXHIBIT 15.1 EXHIBIT 15.1 November 15, 2002 The Board of Directors and Stockholders, Sun Microsystems, Inc. We are aware of the incorporation by reference in the Registration Statement (Form S-8) of Sun Microsystems, Inc. pertaining to the Pirus Networks, Inc. 2000 Stock Option Plan of our report dated October 17, 2002, relating to the unaudited condensed consolidated interim financial statements of Sun Microsystems, Inc. that are included in its Form 10-Q for the quarter ended September 29, 2002. Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a part of the registration statement prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933. Very truly yours, /s/ Ernst & Young LLP EX-23.2 6 f86025exv23w2.txt EXHIBIT 23.2 EXHIBIT 23.2 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8) of Sun Microsystems, Inc. pertaining to the Pirus Networks, Inc. 2000 Stock Option Plan of our report dated September 16, 2002, with respect to the consolidated financial statements and schedule of Sun Microsystems, Inc. included in its Annual Report (Form 10-K) for the year ended June 30, 2002, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP San Jose, California November 15, 2002 -----END PRIVACY-ENHANCED MESSAGE-----

EX-4.1

                                                                     EXHIBIT 4.1

                                                             AS AMENDED 11/11/02

                              PIRUS NETWORKS, INC.

                             2000 STOCK OPTION PLAN


        1.     PURPOSE OF THE PLAN.

        This stock option plan (the "Plan") is intended to encourage ownership
of the stock of Pirus Networks, Inc. (the "Company") by employees, consultants
and advisors of the Company and its subsidiaries, to induce qualified personnel
to enter and remain in the employ of the Company or its subsidiaries and
otherwise to provide additional incentive for optionees to promote the success
of its business.

        2.     STOCK SUBJECT TO THE PLAN.

        (a)    The total number of shares of the authorized but unissued or
Treasury shares of the common stock, $.01 par value per share, of the Company
(the "Common Stock") for which options may be granted under the Plan shall not
exceed seventeen million four hundred and fifty thousand (17,450,000) shares,
subject to reduction for the shares granted by the Company pursuant to the 2000
Restricted Stock Purchase Plan and shall be subject to adjustment as provided in
Section 12 hereof.

        (b)    If an option granted hereunder shall expire or terminate for any
reason without having vested fully or having been exercised in full, the
unvested and/or unpurchased shares subject thereto shall again be available for
subsequent option grants under the Plan.

        (c)    Stock issuable upon exercise of an option granted under the Plan
may be subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Committee.


                                       1


        3.     ADMINISTRATION OF THE PLAN.

        (a)    At the discretion of the Company's Board of Directors, the Plan
shall be administered either (i) by the full Board of Directors of the Company
or (ii) by a committee (the "Committee") consisting of two or more members of
the Company's Board of Directors. In the event that the full Board of Directors
is the administrator of the Plan, references herein to the Committee shall be
deemed to include the full Board of Directors. The Board of Directors may from
time to time appoint a member or members of the Committee in substitution for or
in addition to the member or members then in office and may fill vacancies on
the Committee however caused. The Committee shall choose one of its members as
Chairman and shall hold meetings at such times and places as it shall deem
advisable. A majority of the members of the Committee shall constitute a quorum
and any action may be taken by a majority of those present and voting at any
meeting.

        (b)    Any action may also be taken without the necessity of a meeting
by a written instrument signed by a majority of the Committee. The decision of
the Committee as to all questions of interpretation and application of the Plan
shall be final, binding and conclusive on all persons. The Committee shall have
the authority to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any option agreement granted hereunder in the manner and to the
extent it shall deem expedient to carry the Plan into effect and shall be the
sole and final judge of such expediency. No Committee member shall be liable to
any action or determination made in good faith.


                                       2


        4.     TYPE OF OPTIONS.

        Options granted pursuant to the Plan shall be authorized by action of
the Committee and may be designated as either incentive stock options meeting
the requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or non-qualified options which are not intended to meet the
requirements of such Section 422 of the Code, the designation to be in the sole
discretion of the Committee. The Plan shall be administered by the Committee in
such manner as to permit options to qualify as incentive stock options under the
Code.

        5.     ELIGIBILITY.

        Options designated as incentive stock options shall be granted only to
employees (including officers and directors who are also employees) of the
Company and any of its subsidiaries. Options designated as non-qualified options
may be granted to directors (whether or not employees), officers, employees,
consultants, and advisors of the Company or of any of its subsidiaries.
"Subsidiary" or "subsidiaries" shall be as defined in Section 424 of the Code
and the Treasury Regulations promulgated thereunder (the "Regulations").

        The Committee shall, from time to time, at its sole discretion, select
from such eligible individuals those to whom options shall be granted and shall
determine the number of shares to be subject to each option. In determining the
eligibility of an individual to be granted an option, as well as in determining
the number of shares to be granted to any individual, the Committee in its sole
discretion shall take into account the position and responsibilities of the
individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Committee may deem relevant.


                                       3


        No option designated as an incentive stock option shall be granted to
any employee of the Company or any subsidiary if such employee owns, immediately
prior to the grant of an option, stock representing more than 10% of the voting
power or more than 10% of the value of all classes of stock of the Company or a
parent or a subsidiary, unless the purchase price for the stock under such
option shall be at least 110% of its fair market value at the time such option
is granted and the option, by its terms, shall not be exercisable more than five
years from the date it is granted. In determining the stock ownership under this
paragraph, the provisions of Section 424(d) of the Code shall be controlling. In
determining the fair market value under this paragraph, the provisions of
Section 7 hereof shall apply.

        6.     OPTION AGREEMENT.

        Each option shall be evidenced by an option agreement (the "Agreement")
duly executed on behalf of the Company and by the optionee to whom such option
is granted, which Agreement shall comply with and be subject to the terms and
conditions of the Plan. The Agreement may contain such other terms, provisions
and conditions which are not inconsistent with the Plan as may be determined by
the Committee, provided that options designated as incentive stock options shall
meet all of the conditions for incentive stock options as defined in Section 422
of the Code. The date of grant of an option shall be as determined by the
Committee. More than one option may be granted to an individual.

        7.     OPTION PRICE.

        The option price or prices of shares of the Company's Common Stock for
options designated as non-qualified stock options shall be determined by the
Committee, but in no event shall the option price of a non-qualified stock
option be less than the fair market value of such Common Stock at the time the
option is granted, as determined by the Committee. The option price or prices of
shares of


                                       4


the Company's Common Stock for incentive stock options shall be the fair market
value of such Common Stock at the time the option is granted as determined by
the Committee in accordance with the Regulations promulgated under Section 422
of the Code. If such shares are then listed on any national securities exchange,
the fair market value shall be the mean closing price on the largest such
exchange on the business day immediately preceding the date of the grant of the
option. If the shares are not then listed on any such exchange, the fair market
value of such shares shall be the mean closing price as reported in the National
Association of Securities Dealers Automated Quotation National Market
("NASDAQ/NM") for the business day immediately preceding the date of the grant
of the option. If the shares are not then either listed on any such exchange or
quoted in NASDAQ/NM, the fair market value shall be the mean between the average
of the "Bid" and the average of the "Ask" prices, if any, as reported in the
National Daily Quotation Service for the business day immediately preceding the
date of the grant of the option, or, if none, shall be determined by taking a
weighted average of the means between the highest and lowest sales prices on the
nearest date before and the nearest date after the date of grant in accordance
with Treasury Regulations Section 25.2512-2. If the fair market value cannot be
determined under the preceding three sentences, it shall be determined in good
faith by the Committee.

        8.     MANNER OF PAYMENT; MANNER OF EXERCISE.

        (a)    The payment of the exercise price, unless otherwise determined by
the Committee, shall be paid by delivery of (i) cash or a check payable to the
order of the Company in an amount equal to the exercise price of such options,
(ii) shares of Common Stock of the Company owned by the optionee having a fair
market value equal in amount to the exercise price of the options being
exercised, (iii) any combination of (i) and (ii), provided, however, that
payment of the exercise price by delivery of shares of Common Stock of the
Company owned by such optionee may be made only


                                       5


if such payment does not result in a charge to earnings for financial accounting
purposes as determined by the Committee, or (iv) payment may also be made by
delivery of a properly executed exercise notice to the Company, together with a
copy of irrevocable instruments to a broker to deliver promptly to the Company
the amount of sale or loan proceeds to pay the exercise price. The fair market
value of any shares of the Company's Common Stock which may be delivered upon
exercise of an option shall be determined by the Committee in accordance with
Section 7 hereof. To facilitate clause (iv) above, the Company may enter into
agreements for coordinated procedures with one or more brokerage firms. The date
of exercise shall be the date of delivery of such exercise notice.

        (b)    To the extent that the right to purchase shares under an option
has accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the option
at such time, during ordinary business hours, after 9:00 a.m. but not more than
thirty (30) days from the date of receipt of the notice by the Company, as shall
be designated in such notice, or at such time, place and manner as may be agreed
upon by the Company and the person or persons exercising the option. Upon
exercise of the option and payment as provided above, the optionee shall become
a stockholder of the Company as to the Shares acquired upon such exercise.


                                       6


        9.     EXERCISE OF OPTIONS.

        (a)    Each option granted under the Plan shall, subject to Section
10(b) and Section 12 hereof, be exercisable with reference to the Vesting
Reference Date (the date selected by the Committee) as follows: prior to the
First Anniversary Date of the Vesting Reference Date -- zero percent (0%); on
the First Anniversary Date of the Vesting Reference Date -- twenty-five percent
(25%). Thereafter, additional shares shall vest equally on a monthly basis, in
arrears, such that by the Fourth Anniversary Date of the Vesting Reference Date
all shares shall vest, provided, however, that no option granted under the Plan
shall have a term in excess of ten (10) years from the date of grant.
Notwithstanding any other provisions of this section, in the event of the death
of the Participant, the Participant will automatically receive twelve (12)
months accelerated vesting under his or her Agreement or Stock Repurchase
Agreement, if applicable, as provided in Section 9(b).

        To the extent that an option to purchase shares is not exercised by an
optionee when it becomes initially exercisable, it shall not expire but shall be
carried forward and shall be exercisable, on a cumulative basis, until the
expiration of the exercise period. No partial exercise may be made for less than
fifty (50) full shares of Common Stock, unless the option is exercisable for
less than fifty (50) shares of Common Stock.

        (b)    Notwithstanding the foregoing, the Agreement may provide that the
option shall be immediately exercisable by the optionee provided that the
optionee enters into a Stock Repurchase Agreement approved by the Committee
which provides for a reverse vesting schedule in substance similar to that set
forth in Section 9(a) hereof, such unvested shares being held either in escrow
or otherwise by the Secretary or Treasurer of the Company until vested.


                                       7


        (c)    Notwithstanding the foregoing, the Committee may in its
discretion (i) specifically provide for another time or times of exercise or
(ii) accelerate the exercisability of any option subject to such terms and
conditions as the Committee deems necessary and appropriate.

        10.    TERM OF OPTIONS; EXERCISABILITY.

        (a)    Term.

               (1)    Each option shall expire not more than ten (10) years from
the date of the granting thereof, but shall be subject to earlier termination as
herein provided.

               (2)    Except as otherwise provided in this Section 10, an option
granted to any employee optionee who ceases to be an employee of the Company or
one of its subsidiaries shall terminate thirty (30) days after the date such
optionee ceases to be an employee of the Company or one of its subsidiaries, or
on the date on which the option expires by its terms, whichever occurs first.

               (3)    If such termination of employment is because of dismissal
for cause or because the employee is in breach of any employment agreement, such
option will terminate on the date the optionee ceases to be an employee of the
Company or one of its subsidiaries.

               (4)    If such termination of employment is because the optionee
has become permanently disabled (within the meaning of Section 22(e)(3) of the
Code), such option shall terminate on the last day of the sixth month from the
date such optionee ceases to be an employee, or on the date on which the option
expires by its terms, whichever occurs first.

               (5)    In the event of the death of any optionee, any option
granted to such optionee shall terminate on the last day of the sixth month from
the date of death, or on the date on which the option expires by its terms,
whichever occurs first.


                                       8


               (6)    Notwithstanding subparagraphs (2), (3), (4) and (5) above,
the Committee shall have the authority to extend the expiration date of any
outstanding option in circumstances in which it deems such action to be
appropriate.

        (b)    Exercisability. An option granted to an employee optionee who
ceases to be an employee of the Company or one of its subsidiaries, whether by
having become permanently disabled, as defined in Section 22(e)(3) of the Code,
by death, or otherwise, shall be exercisable only to the extent that the right
to purchase shares under such option has accrued and is in effect on the date
such optionee ceases to be an employee of the Company or one of its
subsidiaries. Options granted to non-employees shall have such exercisability
standards as the Committee shall determine.

        (c)    Stockholders' Agreement. Upon exercise by the Participant, such
Participant shall enter into a Stockholders' Agreement, such agreement to be on
such further terms and conditions as is determined by the Committee.

        11.    OPTIONS NOT TRANSFERABLE.

        The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee otherwise than by will
or the laws of descent and distribution or as otherwise required by statute and
any such option shall be exercisable during the lifetime of such optionee only
by him. Any option granted under the Plan shall be null and void and without
effect upon the bankruptcy of the optionee to whom the option is granted, or
upon any attempted assignment or transfer, except as herein provided, including
without limitation any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition, attachment, divorce, trustee
process or similar process, whether legal or equitable, of such option.

        12.    RECAPITALIZATIONS, REORGANIZATIONS AND THE LIKE.


                                       9


        (a)    In the event that the outstanding shares of the Common Stock of
the Company are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by reason of
any reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, combination of shares, or dividends payable in capital stock,
appropriate adjustment shall be made in the number and kind of shares as to
which options may be granted under the Plan and as to which outstanding options
or portions thereof then unexercised shall be exercisable, to the end that the
proportionate interest of the optionee shall be maintained as before the
occurrence of such event; such adjustment in outstanding options shall be made
without change in the total price applicable to the unexercised portion of such
options and with a corresponding adjustment in the option price per share.

        (b)    In addition, unless otherwise determined by the Committee in its
sole discretion, in the case of any Change of Control (as hereinafter defined)
of the Company, the purchaser(s) of the Company's assets or stock may, in his,
her or its discretion, deliver to the optionee the same kind of consideration
that is delivered to the stockholders of the Company as a result of such sale,
conveyance or Change of Control, or the Committee may cancel all outstanding
options in exchange for consideration in cash or in kind, which consideration in
both cases shall be equal in value to those shares of stock or other securities
the optionee would have received had the option been exercised (to the extent
then exercisable) and no disposition of the shares acquired upon such exercise
been made prior to such Change of Control, less the option price therefor. Upon
receipt of consideration by the optionee, his or her option shall immediately
terminate and be of no further force and effect. The value of the stock or other
securities the optionee would have received if the option had been exercised
shall be determined in good faith by the Committee, and in the case of shares of
the Common Stock of the Company, in accordance with the provisions of Section 7
hereof. The Committee shall also have the power and right to accelerate the
exercisability of any options,


                                       10


notwithstanding any limitations in this Plan or in the Agreement upon such
Change of Control. A "Change of Control" shall be deemed to have occurred if any
of the following conditions have occurred: (1) the merger or consolidation of
the Company with another entity where the Company is not the surviving entity
and where after the merger or consolidation (i) its stockholders prior to the
merger or consolidation hold less than 50% of the voting stock of the surviving
entity and (ii) its directors prior to the merger or consolidation are less than
a majority of the Board of Directors of the surviving entity; (2) the sale of
all or substantially all of the Company's assets to a third party and subsequent
to the transaction (i) its stockholders hold less than 50% of the voting stock
of said third party and (ii) its directors are less than a majority of the Board
of Directors of said third party; or (3) a transaction or series of related
transactions, including a merger of the Company with another entity where the
Company is the surviving entity, whereby (i) 50% or more of the voting stock of
the Company after the transaction(s) is owned actually or beneficially by
parties who held less than thirty percent (30% ) of the voting stock, actually
or beneficially, prior to the transaction(s) and (ii) the Board of Directors
after the transaction(s) or within sixty (60) days thereof, is comprised of less
than a majority of the directors serving prior to the transaction(s).

        (c)    No fraction of a share shall be purchasable or deliverable upon
the exercise of any option, but in the event any adjustment hereunder of the
number of shares covered by the option shall cause such number to include a
fraction of a share, such fraction shall be adjusted to the nearest smaller
whole number of shares.

        13.    NO SPECIAL EMPLOYMENT RIGHTS -- LEAVES OF ABSENCE.

        Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any option holder any right with respect to the continuation
of his or her employment by the Company (or any subsidiary thereof) or interfere
in any way with the right of the Company (or any subsidiary thereof), subject to
the terms of any separate employment agreement to the contrary, at any time to


                                       11


terminate such employment or to increase or decrease the compensation of the
option holder from the rate in existence at the time of the grant of an option.
Whether an authorized leave of absence, or absence in military or government
service, shall constitute termination of employment shall be determined by the
Committee at the time.

        14.    WITHHOLDING.

        The Company's obligation to deliver shares upon the exercise of any
option granted under the Plan shall be subject to the option holder's
satisfaction of all applicable Federal, state and local income, excise,
employment and any other tax withholding requirements.

        15.    RESTRICTIONS ON ISSUE OF SHARES.

        (a)    Notwithstanding the provisions of Section 8, the Company may
delay the issuance of shares covered by the exercise of an option and the
delivery of a certificate for such shares until one of the following conditions
shall be satisfied:

                   (1) The shares with respect to which such option has been
exercised are at the time of the issue of such shares effectively registered or
qualified under applicable Federal and state securities acts now in force or as
hereafter amended; or

                   (2) Counsel for the Company shall have given an opinion,
which opinion shall not be unreasonably conditioned or withheld, that such
shares are exempt from registration and qualification under applicable Federal
and state securities acts now in force or as hereafter amended.

        (b)    It is intended that all exercises of options shall be effective,
and the Company shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to qualify shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for the
purpose


                                       12


of covering the issue of shares in respect of which any option may be exercised,
except as otherwise agreed to by the Company in writing.

        16.    PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT
REGISTRATION.

        Unless the shares to be issued upon exercise of an option granted under
the Plan have been effectively registered under the Securities Act of 1933, as
now in force or hereafter amended, the Company shall be under no obligation to
issue any shares covered by any option unless the person who exercises such
option, in whole or in part, shall give a written representation and undertaking
to the Company which is satisfactory in form and scope to counsel for the
Company and upon which, in the opinion of such counsel, the Company may
reasonably rely, that he or she is acquiring the shares issued pursuant to such
exercise of the option for his or her own account as an investment and not with
a view to, or for sale in connection with, the distribution of any such shares,
and that he or she will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law, and that if shares are
issued without such registration, a legend to this effect may be endorsed upon
the securities so issued. In the event that the Company shall, nevertheless,
deem it necessary or desirable to register under the Securities Act of 1933 or
other applicable statutes any shares with respect to which an option shall have
been exercised, or to qualify any such shares for exemption from the Securities
Act of 1933 or other applicable statutes, then the Company may take such action
and may require from each optionee such information in writing for use in any
registration statement, supplementary registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors and controlling persons from such holder against all losses, claims,
damages and liabilities arising from such use of the information so furnished
and caused by


                                       13


any untrue statement of any material fact therein or caused by the omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made.

        17.    LOANS.

        The Company may make loans to optionees to permit them to exercise
options. If loans are made, the requirements of all applicable Federal and state
laws and regulations regarding such loans must be met and the stock issued
pursuant to the exercise of such option shall be pledged to the Company pursuant
to a Stock Pledge Agreement as security for the loan until such amounts are
repaid.

        18.    MODIFICATION OF OUTSTANDING OPTIONS.

        The Committee may authorize the amendment of any outstanding option with
the consent of the optionee when and subject to such conditions as are deemed to
be in the best interests of the Company and in accordance with the purposes of
this Plan.

        19.    APPROVAL OF STOCKHOLDERS.

        The Plan shall be subject to approval by the vote of stockholders
holding at least a majority of the voting stock of the Company present, or
represented, and entitled to vote at a duly held stockholders' meeting, or by
written consent of the stockholders as provided for under applicable state law,
within twelve (12) months after the adoption of the Plan by the Board of
Directors and shall take effect as of the date of adoption by the Board of
Directors upon such approval. The Committee may grant options under the Plan
prior to such approval, but any such option shall become effective as of the
date of grant only upon such approval and, accordingly, no such option may be
exercisable prior to such approval.


                                       14


        20.    TERMINATION AND AMENDMENT.

        Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly adopted by the Board
of Directors of the Company. The Board of Directors may at any time terminate
the Plan or make such modification or amendment thereof as it deems advisable;
provided, however, that except as provided in this Section 20, the Board of
Directors may not, without the approval of the stockholders of the Company
obtained in the manner stated in Section 19, increase the maximum number of
shares for which options may be granted or change the designation of the class
of persons eligible to receive options under the Plan, or make any other change
in the Plan which requires stockholder approval under applicable law or
regulations, including any approval requirement which is a prerequisite for
exemptive relief under Section 16 of the 1934 Act. The Committee may terminate,
amend or modify any outstanding option without the consent of the option holder,
provided, however, that, except as provided in Section 12, without the consent
of the optionee, the Committee shall not change the number of shares subject to
an option, nor the exercise price thereof, nor extend the term of such option.

        21.    RESERVATION OF STOCK.

        The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.



                                       15


        22.    LIMITATION OF RIGHTS IN THE OPTION SHARES.

        An optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.

        23.    NOTICES.

        Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee, to the address as appearing on the
records of the Company.


        APPROVED BY THE BOARD:  January 11, 2001
                                ----------------

        APPROVED BY STOCKHOLDERS:  January 11, 2001
                                   ----------------

        AMENDMENT APPROVED BY THE BOARD:  October 25, 2002
                                          ----------------

        AMENDMENT APPROVED BY STOCKHOLDERS:  November 11, 2002
                                             -----------------




                                       16

EX-5.1

                                                                     EXHIBIT 5.1

                               November 20, 2002

Sun Microsystems, Inc.
4150 Network Circle
Santa Clara, CA 95054

        RE:  REGISTRATION STATEMENT ON FORM S-8

Ladies and Gentlemen:

        We have acted as counsel to Sun Microsystems, Inc., a Delaware
corporation (the "COMPANY"), and have examined the Registration Statement on
Form S-8 (the "REGISTRATION STATEMENT") to be filed by the Company with the
Securities and Exchange Commission on or about November 20, 2002 in connection
with the registration under the Securities Act of 1933, as amended (the "1933
Act") of 2,608,846 shares of the Company's Common Stock, par value $0.00067 per
share (the "SHARES"), reserved for issuance under the Pirus Networks, Inc. 2000
Stock Option Plan, as amended (the "PLAN").

        As your legal counsel, we have examined the Restated Certificate of
Incorporation, as amended, and Bylaws of the Company, the Plan and such other
documents of the Company as we have deemed necessary or appropriate for the
purposes of the opinion expressed herein, and are familiar with the proceedings
proposed to be taken by the Company in connection with the operation and
administration of the Plan and the sale and issuance of the Shares pursuant to
the Plan.

        It is our opinion that the Shares, when issued and sold in the manner
referred to in the Plan and pursuant to the agreements which accompany the Plan,
will be legally and validly issued, fully paid and nonassessable.

        We consent to the use of this opinion as an Exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement and any subsequent amendment thereto.

                                        Very truly yours,

                                        WILSON SONSINI GOODRICH & ROSATI
                                        Professional Corporation

                                        /s/ Wilson Sonsini Goodrich & Rosati

EX-15.1

                                                                    EXHIBIT 15.1



November 15, 2002

The Board of Directors and Stockholders, Sun Microsystems, Inc.

We are aware of the incorporation by reference in the Registration Statement
(Form S-8) of Sun Microsystems, Inc. pertaining to the Pirus Networks, Inc. 2000
Stock Option Plan of our report dated October 17, 2002, relating to the
unaudited condensed consolidated interim financial statements of Sun
Microsystems, Inc. that are included in its Form 10-Q for the quarter ended
September 29, 2002.

Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.



                                    Very truly yours,

                                    /s/ Ernst & Young LLP

EX-23.2

                                                                    EXHIBIT 23.2


               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

        We consent to the incorporation by reference in the Registration
Statement (Form S-8) of Sun Microsystems, Inc. pertaining to the Pirus Networks,
Inc. 2000 Stock Option Plan of our report dated September 16, 2002, with respect
to the consolidated financial statements and schedule of Sun Microsystems, Inc.
included in its Annual Report (Form 10-K) for the year ended June 30, 2002,
filed with the Securities and Exchange Commission.

                                        /s/ Ernst & Young LLP


San Jose, California
November 15, 2002